We are making a number of changes to the rules of our Designated Professional Body (DPB) scheme. The scheme enables us to regulate our firms for general insurance distribution activities, on behalf of the UK Financial Conduct Authority (FCA).
These rules changes are necessary to ensure our scheme complies with new requirements set out in the EU’s Insurance Distribution Directive (IDD) and the Markets in Financial Instruments Directive. These Directives are being implemented by the FCA. Only by amending our rules accordingly, are we able to keep offering our regulatory services to firms undertaking general insurance distribution activities.
The new rules were scheduled to come into effect on 23 February 2018. There is proposal in the European Parliament to extend the implementation date, but this has not yet been approved. Member States (including the UK) will still be required to transpose the IDD into national law by the original date, 23 February 2018. However, under the current proposals, firms will not be required to comply with the IDD until 1 October 2018. The European Parliament and the Council will need to agree and confirm the new application date in an accelerated legislative procedure. We will keep you informed as this situation progresses.
We will publish the new rules and guidance before the application date. For now, DPB scheme firms must know that the most important changes are:
New 15 hour Continued Professional Development (CPD) requirement.
Firm employees engaging in general insurance distribution activities will need to comply with a new requirement of 15 hours of CPD per year.
These 15 hours can count towards the RICS profession’s CPD requirement of 20 hours, provided that the number of hours of insurance related CPD reflects that the professional’s general insurance distribution activities are incidental to offering surveying services.
Increase in Professional Indemnity Insurance (PII) cover
The minimal PII cover for DPB scheme firms is to be increased to €1.25M for single cases and €1.85M for the annual aggregate.
New Insurance Product Information Document (IPID) requirements
DPB scheme firms will also be required to obtain and provide their clients with an IPID. An IPID is available from the insurance provider. The firm will be required to issue the IPID together with the Demands and Needs Statement to their clients before the placement of the insurance.
Providing details on remuneration received
The Client must be informed, depending on the method of calculation, of the amount of the fee, commission or any other type of remuneration received in relation to the insurance contract, or where this is not possible, on the method of calculation.
Keep up to date with the next steps
Pending the publication of the FCA’s Perimeter Guidance, the activity of introducing potential policyholders to intermediaries, without further additional steps to assist in the conclusion of a contract, will no longer be considered a regulated activity. Our rules will be updated accordingly once the FCA provides further guidance on this matter.
If you require more information at this stage, please contact us at firstname.lastname@example.org
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